Saudi Arabian Insurance Company receives A- rating from A.M. Best

A.M. Best, the U.S.-based insurance rating agency, recently gave Saudi Arabian Insurance Company (Damana) a financial strength rating of A- (Excellent), showing Damana’s ratings as strong.

The ratings reflect the company’s strong regional business profile with stable risk-adjusted capitalization and a track record of robust operational performance.

Some factors are offsetting the rating, such as the company’s low, but steadily improving level of premium retention and high investment concentration within the group.

Damana operates strong regional franchises outside of Saudi Arabia with branches in Bahrain, the United Arab Emirates, Oman and Kuwait.

While Damana is benefiting from regional diversification, the company is heavily concentrated in the medical division, particularly through its strategic relationship with Cigna in the United States. Damana has a relatively low overall premium retention level of nearly 17 percent, since the company takes in only a small share of its Cigna-related business.

Premium retention is expected to rise as Damana gains more out of transactions with Cigna. Figures for the first quarter of 2015 show this strategy is working with a sharp increase in premium retention.

Damana has shown good underwriting profitability in recent years, producing solid combined ratios below 85 percent, while growing premium revenue at an average of 34 percent over the past five years. Coupled with good investment yields, the company’s underwriting performance is expected to stay stable with investment income augmenting underwriting profits.